Medline Industries, Inc. v. United States
21-1174
| Fed. Cl. | Aug 9, 2021Background
- DLA awarded large Gen V (MSPV) IDIQ contracts in 2016 to Cardinal and Owens & Minor; VA issued a separate MSPV 2.0 solicitation in 2019 and announced awards in Oct. 2020 to Medline and Cardinal.
- VA explored integrating/transitioning its MSPV requirements to DLA (pilot at VISN 20), then accelerated plans to transfer multiple VISNs to DLA on an expedited timeline.
- VA and DLA officials (and GAO) documented operational, legal, and ethical concerns about the proposed transfer, including potential Competition in Contracting Act (CICA)/scope problems and out-of-scope contract modifications.
- Multiple protests and corrective-action proceedings occurred (GAO and VA). Concordance and Medline filed consolidated bid protests in the Court of Federal Claims challenging the transfer and the MSPV 2.0 solicitation; O&M also litigated related issues.
- The Government conceded the administrative record lacked adequate support for the transfer; the Court found the transfer unlawful and that the MSPV 2.0 solicitation no longer reflected the agency’s current needs, enjoined transfer/awards (with limited carve-out), and awarded Concordance bid-preparation costs for breach of an implied-in-fact contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Lawfulness of VA’s planned transfer of MSPV requirements to DLA (APA/CICA/FAR challenges) | Transfer unlawful: exceeds scope of DLA contracts and lacks required analyses/authority; violates procurement law | Government initially defended, then conceded record lacks rational basis and sought remand; argued remedies should be limited | Transfer is unsupported by the administrative record, arbitrary and capricious; permanent injunction against transfer on this record (VISN 20 pilot carved out) |
| Whether MSPV 2.0 solicitation must be amended/resolicited under FAR §15.206 because agency requirements changed | MSPV 2.0 no longer reflects VA’s needs (performance period/scope truncated by transfer plans); amendment or resolicitation required | Government argued concession moots claim and that IDIQ uncertainty makes changes permissible; Cardinal argued FAR §15.206 inapplicable post-award | Court held the solicitation does not reflect current needs, violated FAR §15.206, and enjoined awards under Solicitation No. 36C10G-19-R-0050 in its current form |
| Timeliness/standing and competitive prejudice for Concordance’s Scope Claim | Timely: constructive/actual notice of the accelerated transfer occurred in March 2021; suffered non-trivial competitive injury and impaired pricing strategy | Government and Medline contended the claim was untimely or failed to show competitive prejudice/standing | Court found Concordance’s challenge timely and that it demonstrated competitive prejudice (sufficient for pre-award standing) |
| Breach of implied-in-fact contract to fairly consider proposals; entitlement to bid preparation/proposal costs | VA proceeded despite known ethical/legal issues and plans to truncate work, breaching implied duty to consider offers fairly; seek bid costs | Government did not meaningfully respond and thus waived defenses | Court held VA acted arbitrarily and capriciously such that Concordance is entitled to judgment on implied-in-fact contract claim and recovery of bid preparation/proposal costs (quantum to follow) |
| Scope of injunctive relief / carve-outs | Plaintiffs sought broad relief enjoining transfer and awards; Concordance argued solicitation unitary so entire solicitation must be amended | Government sought narrow injunction excluding VISN 20 and VISN 6 transfers | Court enjoined transfer and awards generally but carved out the VISN 20 pilot facilities; VISN 6 is included in the injunction |
Key Cases Cited
- Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d 901 (Fed. Cir. 2013) (standard of APA review in bid-protest cases)
- Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir. 2009) (pre-award protest prejudice standards and non-trivial competitive injury)
- Orion Tech., Inc. v. United States, 704 F.3d 1344 (Fed. Cir. 2013) (when adequate factual predicate exists, use "substantial chance" prejudice test)
- Bannum, Inc. v. United States, 404 F.3d 1346 (Fed. Cir. 2005) (prejudice is a question of fact)
- Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139 (2010) (injunctive relief is extraordinary; prefer narrower remedies when sufficient)
- Cent. Arkansas Maint., Inc. v. United States, 68 F.3d 1338 (Fed. Cir. 1995) (implied-in-fact contract in procurement: obligation to consider offers fairly)
- Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419 U.S. 281 (1974) (scope of arbitrary-and-capricious review)
- Burlington Truck Lines, Inc. v. United States, 371 U.S. 156 (1962) (agency must articulate rational connection between facts and choice)